How to Handle Estate Planning When You Own Property in Both the U.S. and China
By Jayden Cai, Attorney at Law
Gillin Law Group, PLLC
19910 50th Ave W, Ste. 205
Lynnwood, WA 98036
Tel. (425) 947-1130
Email: [email protected]
For many Chinese families, estate planning becomes especially complicated when assets are spread between two countries. The U.S. and China have completely different legal systems, taxation principles, and inheritance procedures. Without proper planning, your loved ones may face tax complications, delays in probate, and difficult cross-border legal conflicts.
This article explains the key concepts every cross-border family should understand, and offers practical ways to coordinate your estate between the U.S. and China.
- Understanding Key Concepts: Citizenship, Residency, Domicile, and Situs
Before discussing taxation or wills, it’s important to clarify four terms that determine which country has the right to tax or administer your estate.
| Concept | What It Means | Why It Matters |
| Citizenship | Your nationality. | U.S. citizens are taxed on their worldwide estate, regardless of where they live. |
| Residency (for income tax) | Where you live and pay income tax. | You might be a U.S. tax resident even if you hold a foreign passport. |
| Domicile (for estate tax) | Your permanent home—the place you intend to return to. | Determines whether your worldwide assets are subject to U.S. estate tax. |
| Situs | The “location” of an asset for tax purposes. | Only U.S.-situs assets are taxed if you are not a U.S. domiciliary. |
We understand that many readers may wonder whether they themselves qualify as “domiciled” in the U.S., since the definition is notoriously vague. In practice, the IRS looks at your intent to remain in the United States indefinitely and various objective factors such as family ties, property ownership, and community connections. Washington State applies a similar but independent analysis under its own estate tax system, focusing on where your permanent home and personal life are truly centered. Because domicile can have major tax consequences, it’s best to consult an estate planning attorney for a personalized assessment. We will also explore this topic in greater depth in our upcoming articles.
Example:
Mr. Li, a Chinese citizen who has lived in Seattle for 10 years with a green card, may be considered a U.S. domiciliary. This means that when he passes away, both his Seattle home and his Shanghai condo may be included in his U.S. taxable estate.
By contrast, Ms. Chen, who lives full-time in Beijing but owns an investment apartment in Los Angeles, is not domiciled in the U.S. Therefore, only that apartment would be subject to U.S. estate tax.
- The Logic Behind U.S. Estate Tax
The U.S. estate tax system can seem confusing at first, but it operates under two consistent rules: it shares a lifetime exemption with the gift tax, and it looks at both your identity and the situs of your assets.
(a) Unified System with Gift Tax
The estate tax and gift tax share one lifetime exemption — $13.99 million per person in 2025. Gifts made during your lifetime that exceed the annual exclusion (currently $18,000 per recipient) reduce that exemption, so if you give away $3 million in taxable gifts, only $10.99 million remains available for estate tax after your death.
(b) Two Layers of Taxation: Based on Identity and Situs
- S. citizens and domiciliaries are taxed on their worldwide estate.
- Non-domiciliaries are taxed only on U.S.-situs assets — such as U.S. real estate, stock in U.S. corporations, or tangible property located in the country.
Example:
Mrs. Zhang, a U.S. permanent resident, owns a condo in Shanghai and a home in Bellevue. When she passes away, both properties could be included in her U.S. estate for tax purposes.
By contrast, Mr. Wang, a Chinese citizen living in Shanghai who owns only a rental property in California, will only be taxed on that U.S. property if he passes away.
- No U.S.–China Estate Tax Treaty
The U.S. has estate tax treaties with countries like the U.K., France, and Japan to prevent double taxation. However, there is no estate or gift tax treaty between the U.S. and China.
The good news is that China currently does not impose an inheritance or estate tax, so most cross-border families don’t face double taxation — though this could change if China adopts one in the future.
Still, practical problems remain. Chinese banks, courts, and land registries often require probate documents from the U.S. to be translated, notarized, and authenticated before they will release or transfer property. Without clear planning, families can face months of delay and heavy administrative costs.
- Taxation vs. Administration: Two Different Systems
Many families assume that paying estate tax in the U.S. automatically allows them to transfer their overseas assets, but taxation and administration are two entirely separate systems.
| Issue | Who Controls It | What It Covers |
| Taxation | IRS and state tax authorities | Determines whether you owe estate tax, based on your identity and asset location. |
| Administration | Courts and notaries | Manages how and where your assets are legally transferred. |
Example:
Imagine Mr. Xu, a U.S. citizen, passes away owning a bank account in Beijing. His executor in Seattle cannot use the U.S. probate order to close that account, because Chinese banks require a local inheritance certificate issued by a Chinese notary.
In other words, the U.S. may tax your global assets, but it cannot enforce transfers of property located outside the country. Each jurisdiction controls what happens within its own borders.
- Cross-Border Enforcement Challenges
When a person holds property in both the U.S. and China, neither side automatically recognizes the other’s legal process.
(a) U.S. Wills in China
Whether a foreign will can be effectively enforced in China first depends on whether its form is legally valid. Under Article 32 of the Law on the Application of Laws to Foreign-Related Civil Relations, a foreign will’s form is recognized as valid in China if it complies with any of the following laws:
- The law of the place where the will was made — for example, a will made in Nevada is valid if it meets Nevada’s formal requirements for execution.
- The law of the testator’s habitual residence at the time of making or at the time of death.
- The law of the testator’s nationality at the time of making or at the time of death.
If both Chinese and foreign laws could apply, Chinese authorities and courts generally prefer to apply PRC law, particularly when the property involved is located in China.
Even if a foreign will meets China’s formality requirements, China does not automatically recognize U.S. wills or probate orders. However, since both the United States and China are members of the Hague Apostille Convention, the authentication process has become simpler. Instead of full consular legalization, heirs only need to obtain Apostilles for the relevant U.S. documents, such as the original will, death certificate, and proof of kinship, before they can be used in China.
Once apostilled, these documents must be translated into Chinese and submitted to a local notary office in China to apply for an inheritance notarization. In practice, after the notarization is complete, the notarized and translated documents are then provided to the relevant bank, land registry, or court to process the inheritance of the Chinese assets.
If the will cannot be recognized or enforced, the estate will be distributed according to China’s intestate succession rules under the PRC Civil Code.
(b) Chinese Wills in the U.S.
Similarly, U.S. courts will not automatically accept a Chinese will. The document must be translated, certified, and comply with local legal standards for execution.
In Washington State, a foreign will is a last will and testament executed in another state or another country. Under Washington law, a foreign will is valid if it meets either of the following conditions:
- It complies with the minimum requirements of Washington’s probate statutes; or
- It was executed “in the mode prescribed by the law of the place where executed or of the testator’s domicile, either at the time of the will’s execution or at the time of the testator’s death.”
This means that a will made in China can generally be admitted to probate in Washington if it satisfies either Chinese legal formalities or Washington’s own execution standards.
However, even if a foreign will is considered valid in Washington, it may not always achieve the testator’s intended results after death. Differences between Washington law and the law of the country where the will was executed, such as community property rules, spousal rights, or restrictions on foreign real estate, can affect how the estate is ultimately distributed.
If the foreign will is not recognized or fails to meet the legal requirements, the estate will be administered as if the decedent died intestate, following Washington’s intestacy laws.
For that reason, it is strongly recommended that individuals with assets or family members in multiple jurisdictions seek cross-border estate planning advice, ensuring that each will functions properly under the law of the place where the relevant assets are located.
Example:
A family once tried to transfer a Shanghai apartment using a U.S. will probated in California. Even after translation and full authentication, the Chinese notary refused to process the inheritance until a local will was provided. The family spent over a year and thousands of dollars resolving the issue.
- The Role of Dual Wills
For families with property in both countries, the most practical solution is to have dual wills, one in the U.S. and one in China, carefully coordinated to avoid conflict.
Each will should clearly state that it only governs assets within its jurisdiction. For example:
- The U.S. will covers assets under U.S. law (such as U.S. real estate, bank accounts, or investments).
- The Chinese will governs property and accounts located in China.
Example:
Mr. and Mrs. Huang, Washington residents, own a home in Bellevue and a condo in Shanghai. Their estate plan includes:
- A U.S. will prepared under Washington law for U.S. assets;
- A Chinese will (in Chinese) covering their Shanghai property;
- Both coordinated so that one does not revoke the other.
This dual-will structure helps families avoid the need for cross-border probate, reduces delay, and ensures that each jurisdiction respects its own process.
Conclusion
Cross-border estate planning is about making sure your family can navigate two legal systems smoothly. For Chinese families with property in both the U.S. and China, understanding the difference between taxation and administration, the limits of cross-border enforcement, and the value of properly drafted dual wills is essential.
Early and coordinated planning ensures that your global assets are protected, your wishes are honored, and your loved ones are spared unnecessary legal and financial burdens.
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